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Townhouse vs. Duplex: 6 Considerations for Home Buyers

Deciding between a townhouse and a duplex depends on your overall financial goals. Finding the right agent will help you figure out what the market can offer to you. Follow our guide so that you consider every important factor when it comes to buying a townhouse or duplex.
Deciding between a townhouse and a duplex depends on your overall financial goals. Finding the right agent will help you figure out what the market can offer to you. Follow our guide so that you consider every important factor when it comes to buying a townhouse or duplex.

While the idea of collecting passive rental income is appealing, the rules are more complicated than many people think. If you’re considering moving to a townhouse, you get the benefit of a community. Owning a duplex offers the benefits of having extra space for family or for making money from tenants.

Working with a real estate agent will ensure you get the best deal on whichever home is right for you.

Here are six things to consider before you dive into either one.

1. What’s your overall purpose?

Buying in a townhouse is a great way to invest in a community and become part of the fabric of an existing neighborhood. Buying a duplex means purchasing a building that is split into two equal parts, usually side by side.

Many people invest in duplexes because they want an aging parent to live next door or want to rent out the other half. Renting out half a duplex can be lucrative in that the cost of the rent can pay for most of the mortgage for the entire building.

If you’re buying a townhouse for the sake of renting, you need to figure out whether or not the condo community allows units to be rented. Many townhouse contracts include clauses limiting their use to owner-occupied residents.

2. What does the market offer?

When you’re considering a townhouse or a duplex, you need to consider what the market is offering. Townhouse communities are sometimes built with a specific type of clientele in mind. Duplexes that are more than a few decades old might have been built for related families to live side by side.

In many college towns, townhouses are made for college students living off-campus. While anyone could buy one, they may not have all the amenities you’re looking for or be missing things that your family needs.

In urban centers, a townhouse is more accessible than a duplex. A duplex in a city like New York or San Francisco might come at a higher premium than a townhouse. For investors looking to rent the other half out, it might be worth buying a duplex but they still require a hefty down payment.

3. Are there association fees and responsibilities?

When buying a house, there are closing costs, taxes, and associated fees to deal with. You may have to pay lawyers or put money into renovations right away. Closing costs and down payments have to be paid in cash and don’t come out of your mortgage.

If you’re buying a townhouse in an association that charges fees, you’ll have another set of costs to cover immediately. The cost of maintenance fees isn’t always trivial. It could cost you more than $1,000 a month.

While you might not want to pay that high fee, you get certain benefits that duplex owners don’t get. For example, if a duplex owner has an issue with their neighbor or tenant, they have to deal with them directly. Townhouse owners might be able to jettison the problem to the desk of the townhouse association.

4. Financing Might Be Different

While there are no limits to what kind of home you can buy when you’re paying with cash, most people aren’t in the position to buy property with cash. For most of us, the only way to afford a new home or a real estate investment is to apply for a mortgage.

A single townhouse will be, by and large, cheaper than a duplex if it’s located in the same region, in the same condition, and if the townhouse is about half the size of the duplex. However, both types of housing can be paid for with a FHA loan. Home buyers can use a federally-backed loan even when buying a multi-family home so long as the building has four or fewer units and the buyer is a permanent resident of one of them.

5. The Costs Are Different

Townhouses are a popular choice because of the fact that all residents share common areas and amenities. That townhouse residents share one or more walls means that more homes can be clustered together on a small plot of land.

For a duplex, the buyer is the sole owner. There's no association to help with maintenance. However, if the second unit is a rental property, the rent will help to cover maintenance costs. For investors looking to build a small real estate business or to earn passive income, owning one duplex is much cheaper when it comes to maintenance or taxes than having two properties.

6. How much control do you need?

With the responsibilities on your shoulders as a duplex owner, you also get more control. You control who lives next to you, what the rental schedule is, and which repairs are done in which order. With a townhouse, you may have strict rules as to what types of window dressing you use, which kinds of outdoor holiday decorations are okay, and what color your door can be.

For duplex owners, one vital rule is what types of pets you will allow. Many townhouses have a “no pets” rule. That drives down the number of tenants you have available and even the amount of rent you can charge. People who take care of pets may have more expendable income.

Buying a Townhouse vs. Duplex Starts With An Agent

Before you dive into purchasing a property, get an experienced local agent in your corner. With the help of one of our Partner Agents, you get the chance to save big on closing costs while working with an agent from right in your backyard. Our Clever Partner Agents are expert negotiators who work to advocate on behalf of their clients and ensure they end up with the best property to meet their financial goals.

Contact Clever and you’ll be partnered with an experienced local agent who can offer you a no-obligation consultation to help you decide which property is best for you.


Reuven Shechter

Reuven Shechter is the Outreach Coordinator at Clever Real Estate, the free online service that connects you with top real estate agents to help save on commission. He spreads the word about Clever, disseminating studies to journalists and developing relationships with media outlets. Reuven is passionate about investing in real estate and creating lasting success for families. His writing has been featured in Max Real Estate Exposure, Leverage Marketing, and more.

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